An Endowment, Commodity, and Prospect Theory Perspective on Consumer Hoarding Behavior

Abstract

<em>This study investigated the preconditions that drive hoarding behaviors when consumers perceive a </em><em>shortage in supply and are faced with other marketing stimuli indicating product scarcity. Pat research </em><em>shows that hoarding behaviors exists due to the acknowledgement of the scarcity of products that</em><br /><em>previously had been in excess, and consumer response to such scarcity. Endowment Effect, Commodity </em><em>Theory, and the Prospect Theory were used as the basis for our conceptual framework. Data was </em><em>obtained from a random sample of 297 individuals and subjected to statistical analyses. Our findings </em><em>indicated that perceived perishability and scarcity of items that are valued, elicit a reaction in</em><br /><em>consumers who have an aversion to risk due to the prospect of losing an item of value. Losses were </em><em>intensified when perceived perishability and scarcity were established through urgency in advertising </em><em>resulting in higher buying rates. Our findings can help marketing managers acquire more knowledge of </em><em>purchase motives, satisfaction, and feelings of uniqueness gained through hoarding. Furthermore, once </em><em>an understanding of what motivates consumers to accelerate their purchase behavior under perceived </em><em>perishability and scarcity conditions is obtained, pricing and inventory strategies (indeed the entire </em><em>marketing mix) can be strategically designed to meet the needs of the customer.</em>